• "The federal government last year improperly recorded more than $100 billion worth of transactions and could not find many millions of dollars worth of military and civilian equipment."

  • "The Army, audits found, could not substantiate $132 billion worth of property, equipment, and other assets."                    

  • "Federal housing officials (Department of Housing and Urban Development) paid out $900 million in rent subsidies for low-income people to recipients who did not qualify."

           - Scripps Howard News Service, April 1, 1998


  • "Accused of mishandling $500 million in Indian trust funds (Department of Interior), the government acknowledged in  court Thursday that it can't provide some account holders, many of them poor, with basic information about their money."

            - The Associated Press, June 11, 1999


  • "The Treasury Department shredded potential evidence in a multibillion-dollar lawsuit over American Indian trust funds, then covered it up for more than three months, a court appointed investigator concluded."

            - News & Observer, December 7, 1999


  • "The military's money managers last year made almost $7 trillion in adjustments to their financial ledgers in an attempt to make them add up, the Pentagon's inspector general said."

  • "The military says it owns $119.3 billion in ships, trucks, jet engines and more.  But its inspector general said he could not verify that because records lacked supporting documentation."

        - The Associated Press, March 4, 2000


  • The Department of Health and Human Services (HHS), with a $376 billion budget, presents one of the more massive and complex management and program-related challenges in the federal government ... At the heart of its problems, the agency does not have a single, integrated financial accounting system that can be used to track and report financial activities."

  • Our audit of IRS fiscal year 1999 financial statements identified substantial weaknesses in accounting, reporting, and budgetary controls that rendered IRS unable to reliably report how it spent $8.5 billion that Congress appropriated."

            - Major Management Challenges and Program Risks prepared by GAO, January 2001


  • "The Pentagon made $615 million in illegal and improper accounting entries last year to pay its contractor bills, despite a 1990 (CFO Act) law designed to prohibit the practice, according to a congressional report."  

           - Washington Post, July 26, 2001



Taken as a whole, the above independent auditor qualifications of U.S. government/agency financial statements demonstrate decisively the severity and widespread nature of the government's accounting problems. TGAR members have spent our federal careers flagging these problems and pushing for reform solutions — through the chain-of-command, around the chain-of-command, and even with members of Congress. The truth of the matter is that while everyone is interested in talking about government accounting reform, no one will take action to affect government accounting reform.

The following is TGAR’s list of the government's managerial and operational deficiencies that our Government Accounting Prototype (GAP) addresses. 


  •  Archaic budgeting policies

  •  Contradictory and competing accounting and budgeting policies

  •  Failed financial systems

  •  Agency managers unwilling to relinquish ability to "cook the books"


The following paragraphs summarize the above weaknesses and help to explain current government difficulties in designing financial software that is capable of generating meaningful, accurate, and timely financial statements.  This government-wide problem contrasts with GAP's ability to easily explain its integrated accounting and budgeting concepts to private  and public sector accountants alike.  Additionally, GAP's detailed input / output requirements (not illustrated) provide system design personnel with the information needed to design generic software to fit the varying and ever-changing needs of all governments.  



The federal government operates under two separate and irreconcilable processes involving a budgeting (cash-based) process and an accounting (accrual-based) process. The current FASAB process does not satisfy either the government's budgeting requirements or even the most basic accounting requirements, as noted above.  

TGAR proposes an integrated Government Accounting Prototype (GAP) process that is based upon a private-sector Generally Accepted Accounting Principle (GAAP) standard.  GAP's process addresses the inefficiencies and problems resulting from the government's (federal, state, and local) non-integrated processes using two integrated concepts.  They are as follows:



Utilize the government-wide chart of general ledger accounts for both budgeting and accounting purposes -- Utilization of the government-wide (accounting) chart of general ledger accounts for both budgeting and accounting purposes allows the government to effectively track the life cycle of all government budgeting decisions from cradle to grave -- budgeting, procurement, purchase, depreciation, sale, profit/loss, etc. 

Summarize all "on-going" one-year and multiple-year funded appropriations in a single set of financial statements -- The current government requirement of treating "on-going" one-year and multiple-year appropriations as "different" appropriations forces the accountants to, in effect, keep a separate set of books for each of these “different” appropriations. For example, assume that appropriation A (oversimplified) was funded over five fiscal years (A2002, A2001, A2000, A1999, A1998). This appropriation's assets, liabilities, income, expenses, budgeting activity, etc. are effectively scattered over five different appropriations. Consider how ludicrous it would be for a corporation to maintain a separate set of books for each of the years that it sold stock to the public. Similar government practices are equally indefensible. 


GAP addresses this government-induced accounting problem by summarizing all "like" appropriations (A appropriations in this example) in a single set of corporate-style financial statements.  GAP's link with the GAAP standard is readily determined because all GAP (government) input / output compares on a one-for-one basis with a corporation.



The U.S. government established the Federal Accounting Standards Advisory Board (FASAB) in 1990 for the purpose of recommending and enforcing a single government-wide accounting standard for all federal agencies. FASAB's 9-member board, comprised of the Office of Management and Budget (OMB), General Accounting Office (GAO), Department of the Treasury, and other government and non-government entities establish the government's accounting policies. Fundamental weaknesses in these policies include: (1) "politicking" and the lack of accountants involved in the decision making process, (2) A mishmash of budgeting and accounting policies that do not support or explain summary level input requirements (journal entries), and (3) the absence of a GAAP-style standard to ensure that the output is of any value.  e.g. the resultant  trial balance (summary of all journal entries) is capable of generating the FASAB's mandated financial statements.  

As testament to the failure of FASAB's government accountability initiative, GAO’s March 2001 testimony to Congress revealed that for the fourth consecutive year it was unable to express an opinion on the U.S. government's financial statements, due to material weaknesses.

GAP addresses this government accounting deficiency by ensuring that all integrated accounting and budgeting financial statements are generated from a single trial balance.  This basic accounting control ensures the integrity of GAP's financial statement totals. 



As background information, in 1987, the Joint Financial Management Improvement Program (JFMIP) recognized that the federal government's antiquated financial management systems were fatally and irreparably flawed.  The JFMIP encouraged each federal agency to replace each of its myriad financial systems with software from a few, select private vendors.  The fast track approach they chose to accomplish this goal was to place these vendors on a Government Services Agency (GSA) Schedule to virtually eliminate all red tape associated with these purchases.  The intent was to standardize the government's financial software as much as practicable with the ultimate goal of generating both the agency's financial statements and also summarizing that data to produce the U.S. government's consolidated financial statements. 

Due to the lack of accountants involved in the decision-making process and the absence of a GAAP-style accounting input / output standard, few people questioned JFMIP's ability to adequately test the GSA Schedule financial management software.  Thus, the vendors placed on the Schedule did not meet the government's needs simply because no one could define what the requirements were.  As a result, agencies were forced to adapt their operations as well as their (now new) systems first to the failed JFMIP standard and then to the failed FASAB standard.  GAO's written Congressional testimony has revealed the fatal flaws of these processes.  

The GAP model contains detailed generic input / output system requirements (not illustrated) that fulfill the needs of all governments.  These requirements are readily tested and contrasted with the government's failed system initiatives.



One of the benefits of having chaotic, unexplainable, convoluted, and unenforceable government accounting policies, from an agency manger's perspective, is that the books can be endlessly (manually) manipulated.  The lack of GAAP-style accountability, government-wide, provides unending opportunities to circumvent Congress's budgeting limitations, steal government assets, switch funds to hide over-spending violations, enter into illegal contracts, and "cover up" an infinite array of other instances to rip-off the government and adjust (or fudge) the books accordingly.

GAP eliminates the possibility of manually fudged totals because the integrated "budgeting" financial statement totals equal individual or combinations of the "accounting" financial statement totals.  In order to falsify a total or several totals, there would have to be collusion between the accounting and budgeting offices.  Even then, the fudged amounts would be readily detected because  the internal GAAP-style formulas would not equal (See Accounting Overview).



The President, Congress, and the American taxpayers are interested in improving the federal government's efficiency, decreasing its costs, and providing a full accounting of our tax dollars.  Not surprisingly, these same goals exist for all other governments (state, local, and foreign).

GAP is a generic, integrated accounting, budgeting, procurement, and property management process that is easily explained to both accountants and computer design personnel. The resultant generic financial software applies to all government operations.  The fundamental problem in explaining these technical requirements to government finance and system managers is twofold: (1) government finance and system managers rarely possess degrees in either accounting or computer-related fields.  Thus, there is no basis for communicating obvious accounting deficiencies of fundamental system design flaws.  In fact, managers and employees are rewarded for "going along" and even hiding embarrassing agency problems, (2) In 1987, the JFMIP committed the federal government to the failed idea of having "each" agency buy its financial software "off-the-shelf" from one of a number of JFMIP-chosen private sector software vendors.  The government's unqualified finance and system managers committed their agencies to spending millions of dollars (and billions government-wide) on software that produced nothing but more government waste and more falsified financial statement totals (as documented in GAO's written testimony to the U.S. Congress).

The beauty of the internet is the freedom it affords in bypassing the bureaucracy and communicating "the specifics" of the government's failed accountability initiatives to the people who can effect the necessary changes to provide a full accounting of our tax dollars - the President, Congress, and the American taxpayer.

The open-source initiative is another vehicle that would provide a "needed" breath of fresh air into the government's dark and dingy financial policy decision-making process.  What better way to acknowledge the merits of GAP or to improve upon its generic, integrated policies than to have them reviewed -- by anyone?

In short, there are a myriad of reasons why governments have never provided a full accounting of our tax dollars.  Likewise, there are definitive steps that we can take in ending this cycle of waste and abuse if we are open-minded and willing to share our ideas for improving our government -- at all levels.

© Copyright  1999  Larry Fisher